Daniel Eran Dilger
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Reality Check: CDMA/Verizon iPhone is nothing like Mac OS X for Intel

evolution of mobile technologies

Daniel Eran Dilger

It’s become fashionable among Mac writers to refer to a secret CDMA iPhone that’s been under development all this time in parallel to the GSM/UMTS version Apple actually sells, and to compare this to the Intel build Apple secretly maintained for Mac OS X. It’s not really accurate though.
It might seem surprising that Apple hasn’t already released a CDMA/EVDO phone that could work on Sprint and Verizon Wireless in the US, but it shouldn’t be. By keeping the iPhone GSM/UMTS (which, for clarity’s sake, I’ll subsequently refer to as the “3GPP” iPhone), Apple can focus its testing on one mobile technology platform that it can sell globally.

While Sprint and Verizon make up a big chunk of the US market, they are almost irrelevant when looking at the global addressable market Apple has been able to tap with the last four generations of its 3GPP iPhone. In part that’s because many of the customers Apple could possibly pick up in the US can already be (and have been) attracted to AT&T. While today’s CDMA/EVDO networks offer availability advantages over AT&T’s newer and faster, but often more difficult to find 3G network, that competitive advantage is eroding as AT&T fleshes out its 3G/3.5G network.

Apple’s real growth is not going to come from picking up the minority of Verizon users in the US who can’t switch but do want the iPhone; it’s from global expansion. The CDMA/EVDO Qualcomm mobile network technology that Sprint and Verizon use in the US is growing increasingly rare worldwide. Canadian CDMA providers have set up a 3GPP 3G overlay that enables them to support the iPhone. Australian providers have switched wholesale.

Even in the US, Sprint is banking its future on WiMAX (which it brands as “4G,” even though it is not really “4G” at all in the terms defined by standards bodies; 4G means IP-based service beginning at 100 Mbps, while Sprint’s WiMAX offers 3-6Mbps) while Verizon is building out LTE, a 3GPP standard (which is also known as 4G, but is also a stepping stone toward a future 4G implementation). CDMA/EVDO is literally dying worldwide.

If Apple had a ready-to-sell CDMA/EVDO iPhone it had been maintaining in parallel development to the 3GPP iPhone it actually sells, it would be completely moronic for the company to sit on that for going on years, waiting to release it until CDMA/EVDO slipped from being the best US 3G mobile networks in terms of reach, and instead fell into history as a legacy network.

It is possible that Apple could deliver a CDMA/LTE hybrid iPhone or even a global CDMA/UMTS/LTE device that could conceivably work on nearly any carrier’s network. However, that product would not need any special history of underground development perpetuating support for CDMA within the bowls of Apple, as this myth suggests.

Smartphones are network agnostic by design

Apple doesn’t need (and certainly hasn’t needed) to secretly maintain a CDMA/EVDO doppelganger to the 3GPP iPhone in order to “maintain readiness” in a sense similar to its maintaining builds of Mac OS X for Intel chips. Adding support for another mobile technology is not really an intrinsic change to the design of the iPhone at all.

That’s because iPhone, like any other smartphone, is really a computer attached to a mobile phone radio modem via a serial link. The iOS-run part of the iPhone that is essentially a mobile Mac has nearly nothing to do with the baseband end, which functions as a self-contained radio module running its own firmware (not anything really related to Apple’s iOS, although the baseband firmware is obviously distributed with iOS).

Similarly, Android phones don’t have an “Android baseband” either; just like Palm’s webOS and Microsoft’s Windows Mobile and Motorola’s Linux phones, they all have a computer end running the user interface software (typically driven by an ARM application processor like the Snapdragon), and a proprietary, embedded system operating the baseband chip. There is no “open” or GPLed baseband firmware on any mobile phone, because that end of the phone is tightly regulated by governments along with most of the other radio spectrum.

Neither Apple nor Google nor Palm nor Microsoft nor the GNU community directly manage the functions of the baseband processor using their forward facing operating systems. Instead, baseband chip vendors deliver a fully functional chip that supports whatever networks it’s designed to support: CDMA/EVDO, GSM, UMTS, HSPA, LTE, WiMAX, iDEN or whatever. The computer end of the phone simply sends modem commands over the serial link to it, just like an old fashioned PC connected to an old fashioned modem on the analog phone network. The PC didn’t really care what protocol the modem used, and the phone modem didn’t care if it was connected to a Mac or a Windows PC.

Mobile Technology Families and Generations

Different types of networks (and different generations of technology within a family of networks) require expertise in handling their different frequencies and radio modulation types, antenna designs, and optimizations to work on carriers’ networks, so it does require more than just throwing a CDMA chip in the iPhone to get a CDMA iPhone. However, Apple has already been accommodating new network technologies at a regular clip.

While the iPhone has appeared to remain “GSM” through its four generations, that’s just shorthand for noting that Apple has remained attached to AT&T and the largest global market for mobile devices: the 3GPP family of standards. In reality, the original iPhone was GSM, a 2G standard. The iPhone 3G added support for 3G UMTS, which developed out of the same standards bodies that worked on GSM, although it uses entirely different technology.

UMTS uses a WCDMA “air interface,” a modern (but incompatible) cousin of the Qualcomm CDMA/EVDO technology portfolio, rather than the TDMA air interface technology used by GSM. This difference is why iPhones interrupts radio gear with a chirping static when running on GSM/EDGE (which uses TDMA), but don’t when using 3G UMTS (thanks to the lack of interference issues with WCDMA).

Over the last year, the iPhone 3GS added support for 7.2 Mbps HSDPA (High-Speed Downlink Packet Access), which is part of Release 5 of the 3GPP portfolio, and iPhone 4 introduced support for 5.8 Mbps HSUPA (High-Speed Upload Packet Access), part of 3GPP Release 6.

Ahead are 3GPP Release 7 (known as HSPA+, with even faster speeds to 56Mbps up, 22 Mbps down) and Release 8 (called Long Term Evolution or LTE, which is often referred to as 4G but actually described as “3.9G” by the 3GPP.). LTE Advanced, part of Release 10, will qualify as true 4G with 100Mbps service.

In order to support a new mobile network technology (as it has already done across generations of 3GPP standards), Apple needs the appropriate chipset and the expertise and testing required to create a device that works within the carrier network’s specifications. While all of its radio-related job listings specify requisite experience with GSM/UMTS and CDMA technologies, the company hasn’t needed to maintain a skunkworks project around a CDMA iPhone for three years.

evolution of mobile technologies

CDMA iPhone really nothing like Intel Mac OS X

It’s not really difficult for Apple to acquire the technology and expertise to build a CDMA phone, particularly because the baseband is so completely isolated from the computer end of the iPhone, the part where Apple adds its real value. There’s no problem with Apple needing to integrate CDMA support into its own iOS software in such a way that would affect its App Store developers, for example.

This makes a CDMA iPhone very different than the Intel-readiness work Apple secretly maintained for over half a decade within its Mac OS X development program. Unlike the iPhone, the PowerPC/Intel issue was core to Apple’s desktop operating system and all apps that ran on it. Apple had to maintain an Intel build (which was the primary CPU platform of NeXTSTEP when Apple acquired it from NeXT in 1997) in order to keep open the possibility of quickly transitioning back to Intel CPUs in the future, and being able to move all its developers along with it.

In contrast, Microsoft abandoned its own efforts to maintain its Windows NT operating system on different CPU platforms in 2000, resulting in Windows 2000/XP/Vista/7 and third party Windows software subsequently being closely tied to Intel x86 CPUs in a way that makes it very difficult for Microsoft to ever transition to another CPU architecture (and realistically expect that users and developers could survive the transition).

Consider Itanium, Intel’s other PC CPU design; while Microsoft created an edition for it under Windows XP/Vista, users could not effortlessly migrate without dealing with all sorts of driver and software dependencies, and developers needed to make major changes to their code to support the chip, including gutting all sorts of x86 dependencies from their code. Even the move from 32 bit x86 to 64-bit x64 has been a problematic jump for Windows and its users, while Apple’s Mac users don’t even need to know which CPU they’re using.

Does Apple want a CDMA iPhone?

Pretty clearly, Apple hasn’t wanted to deliver a CDMA iPhone. If it did, it certainly could have shipped one. Even the relatively tiny and poor Palm managed to ship both CDMA and UMTS versions of its Palm Pre within a year, and it was on its last legs while doing it. Apple does not face a technical issue in delivering a CDMA phone.

Apple’s reasons for not delivering a CDMA phone relate to a clear cost/benefit evaluation. On the cost side, creating a CDMA iPhone would incur some design and testing expense. The opportunity cost of not putting those efforts into improving the mainstream iPhone are even greater, however. Imagine Apple releasing a poorly performing CDMA phone, and what dramatically bad press that would garner, given the current brouhaha over the iPhone 4’s reception, despite it being ranked as the best iPhone yet by all reviewers to have performed any technical analysis.

Another cost would be the lack of leverage Apple would have with AT&T. From the cheap 3G pricing plans of the iPad, to the pull Apple exercises in other areas, from the App Store to being able to support the iPhone as it wants, Apple has irrefutably done well with AT&T as a partner, regardless of all the grumbling of the pundits in their histrionic blogs who think that Apple’s weakest link is also a terrible bind.

Now the benefits: Apple would gain a potential audience of Sprint and Verizon’s 140 million US customers. Of course, a lot of those customers aren’t interested in the iPhone, or even a smartphone. AT&T has the most smartphone users of any US carrier. Secondly, a large number of the users who would line up to buy a Verizon iPhone are currently AT&T customers. That’s not a net add for Apple, it’s just a net loss for AT&T.

The value of a CDMA iPhone

Verizon and Sprint are not indicating any particularly readiness to dump their own layers of ringtone, media sales and software rentals to grab the iPhone, or any other phone. That indicates it will be tough for Apple to work with either of them to deliver a CDMA iPhone, just to reach their smartphone users. Consider that Verizon’s flagship CDMA smartphone of Q1 2010, the Motorola Droid/Milestone, sold 2.3 million units globally, while Apple sold 8.8 million iPhones globally during the same period.

Now Sprint: its premiere smartphone was the Palm Pre, which sold miserably. It now has the HTC EVO, which Sprint initially said wildly outsold the Pre, before admitting that no, it had lied and the EVO only matched the Pre in orders, and that both were selling poorly (Sprint didn’t use the word poorly).

If Apple released a CDMA iPhone, it would now be competing against Droid Incredible, Droid X, and Droid 2 on Verizon’s network and EVO on Sprint’s. Even if it could wipe out sales of Android phones entirely, it would only end up with a few million more sales, unless there is some huge invisible flood of Verizon buyers who desperately want the iPhone but wouldn’t even consider an Android phone. There’s a fair amount of work involved in creating a second iPhone model just to service a few million users in the US, and that potential is greatly outweighed by Apple continuing to focus on selling iPhone 4 to vast global markets that make Sprint and Verizon’s 140 million users look like nothing.

The top 15 global mobile carriers handle around 3,000 million subscribers, and they’re all GSM/UMTS carriers. Below Verizon and AT&T, there’s another 800 million subscribers handled by the next 15 largest mobile carriers, and again, they’re all GSM/UMTS carriers too. So should Apple aim at selling the iPhone to 3,800 million potential subscribers worldwide, or should it focus its attention on making a single new generation of CDMA iPhone to target some of the 140 million subscribers in the US with a phone that will be obsolete in two years?

The only real reasons Apple has to target CDMA users in the US is the potential saturation of AT&T’s network and the potential risk of allowing Android a market to grow in without competition. Outside the US, Android is doing poorly in any region where Apple also sells the iPhone. Those two factors give Apple some valid reason to consider building a short term CDMA iPhone to sell in the US before LTE becomes widespread in two years or so (and the American GSM/CDMA barrier evaporates).

It would likely be far less work to introduce an iPhone capable of using T-Mobile’s 3G network, an option that would give Apple a second US carrier and help distribute its load somewhat. T-Mobile also offers cheaper service options, potentially enabling it to cater to a different demographic than AT&T’s subscriber base.

If Apple can add CDMA fallback to its next iPhone, it could make sense to deliver a hybrid-network model it can sell anywhere, including Verizon and Sprint. However, the idea that Apple had, has, and will continue to secretly nurture a functional CDMA iPhone but not sell it makes the least sense at all. There’s no need to do this, no value in doing it, and there’s huge opportunity costs in incurring such a significant expense without actually profiting from it.

From that perspective, the idea that Apple will begin selling a Verizon iPhone at the end of the year or in early 2011 also looks doubtful, perhaps wholly contingent upon the possibility of adding CDMA support to iPhone 4 via a hybrid baseband upgrade.

  • JohnWatkins

    Presumably Verizon would not agree to NOT “nerf” the iPhone. And that is largely the reason for the initial exclusive deal. If they continue to assert to Apple their customary desire for handset control, they won’t get iPhones when the exclusivity deal ends.

    You guys just don’t seem to get that Apple is not a “handset manufacturer” that sees “cell communications service providers” as their customers (a la Motorola et al.) Apple sees these guys as unpleasant “orifices” through which they must deal with their actual customers (the users.) Since this is not such a big problem in most other countries, they didn’t need to start with exclusive deals there (plus by the time the international roll occurred, the iPhone had established its successful reputation.)

  • http://motorizedmount.com Alan

    Verizon no longer cripple their phones like they used to. They didn’t even used to allow wifi for example. All their new android models are pretty much open. So that might have been an issue a few years back but not anymore. And I bet Sprint and T-Mobile would bend over backwards to any demand Apple made. Roz’s comments a few posts above were right on the money. Apple sells around 50% of their iPhone’s in the U.S. and it makes little sense to not sell to 72% of that market. That contract with AT&T must have been iron clad because I bet apple are not happy about how fast Android is gaining momentum in the market. I just hope that the CDMA iPhone will be available sooner rather than later. But rest assured it will come because even with LTE, CDMA will still be needed for many more years for any Verizon or Sprint phone.

  • PhilipWing

    I wonder if the judge for the two vs. five or ever chaining to AT&T case understands the tech issue of GSM vs CDMA? Even when you’re done with the two year contact, *it won’t work* on Verizon or Sprint. I hope somebody will make that clear to him or her.

  • Johan

    Thanks Daniel for a good write. Apple’s iPhone business model is heavily dependent on high device subsidies making it available to wider masses of people. Apple gets high subsidies from operators by giving the operators exclusivity to iPhone in a market. I have considered “CDMA iPhone” a red-herring – rumors that Apple purposefully spreads out through back channels when they are facing difficulties in negotiations with AT&T. Then AT&T panics and pays higher subsidies and the “happy” marriage continues as nothing has happened ;-)

  • roz

    “Among the 1,000 consumers surveyed, 51 percent of current Verizon customers said they were “Somewhat/Very Likely” to purchase an iPhone with Verizon. Stating the same were 22 percent of current Sprint customers, 20 percent of T-Mobile customers and 23 percent of current AT&T customers. ” http://www.eweek.com/c/a/Mobile-and-Wireless/Verizon-iPhone-Desire-Is-Already-Hurting-ATandT-810097/